In Charity, Too, the Rich Get Richer

Money is the mother's milk of disaster relief. And over the last 12 months - with the Indian Ocean tsunami, the hurricanes on the Gulf Coast and the Pakistan earthquake - fund-raising records have been broken by the King Kong of relief agencies, the American Red Cross, and by many smaller organizations as well.

While much of this money goes to worthy rescue and rebuilding projects, most Americans are unaware that a shocking amount never ends up helping the people it was intended for. In some cases, agencies take in so much aid that they simply cannot spend it all on one disaster. Sometimes the newly flush groups do little because they have no significant history of working in the stricken area or no experience dealing with a particular type of disaster. Worse, some agencies use the money to push agendas that have little to do with victims' immediate needs.

In late November it was reported that the American Red Cross still had $400 million of the $567 million it had collected for the tsunami since Dec. 26, 2004. Meanwhile, many of the countries hit by the waves, all of which have their own national Red Cross or Red Crescent societies, continue to beg for more help with housing, health and education programs.

Why our Red Cross holds on to so much money is a mystery, but it is hardly the only agency that does so. A survey by InterAction, an umbrella group of relief agencies, found that many other charities reported spending far less than they took in last year; an average of just 42 percent of the money received by 62 relief groups providing tsunami relief has been spent.

As for the Hurricanes Katrina and Rita, the American Red Cross says it has spent more than $1 billion aiding Gulf Coast residents. This may be true, but consider the circumstances. The group used all-encompassing media promotion, drop-off donation boxes and its favorable status with the White House and the Federal Emergency Management Agency to take in more than two-thirds of donations from the American public - some $1.8 billion dollars. Other agencies, many of which were better suited to aspects of the rescue and recovery, went begging.

So it is truly disturbing that the American Red Cross is borrowing $340 million against a $1 billion line of credit to keep operations going on the Gulf Coast - a line of credit it could hardly hope to secure without its large bank balances, its real estate holdings and the expected influx of government money reimbursing it for parts of its role as a first responder in disasters declared by FEMA.

Fortunately, some have taken notice. Representative Bennie Thompson of Mississippi, the ranking Democrat on the Homeland Security Committee, issued a report accusing the Red Cross of having "pulled the wool over our eyes" and calling for increased Congressional oversight of its fund-raising and operations. (The indictment last month in California of at least 14 Red Cross contract workers on fraud charges did not help the group's reputation either.)

To be fair, the Red Cross is generally intent on giving base necessities to victims, whereas other groups seem more intent on aggrandizing themselves and pushing their ideologies. For example, any number of agencies led by television evangelists - such as Pat Robertson's Operation Blessing, Larry Jones's Feed the Children and Franklin Graham's Samaritan's Purse - along with religious groups like the Church of Scientology and the mystical Kabbalah Center, are even more aggressive in fund-raising.

Of course, just because a group has religious affiliations doesn't mean its workers can't provide immediate aid, or that religious succor won't help victims. But do we really think that many of these groups' deliveries of prayer scrolls and holy water (favorites of the Kabbalah group), proselytizing missionaries and used clothing saved or improved many shattered lives?

It is not the act of a cynic to question whether too much money flows to too few charities with the means to conduct pervasive fund-raising campaigns. Last year's disasters showed that billions of dollars in American generosity does not necessarily mean adequate help for those in need.

So, for Americans who want their dollars to do the most good in the immediate aftermath of a tragedy, what to do? For starters, the same Internet that helps raise such large amounts of money can help compassionate Americans give wisely. A subtle reading of a charity's Web site can pay off, charity rating services can be consulted for basic financial data, and Google searches can turn up news reports of a charity's misdeeds. In addition, InterAction (of which my organization is a member) and other nonprofit groups have developed standards and ethics guidelines that may help potential donors.

As for government help, only a few states, including New York, Pennsylvania and Connecticut, carefully regulate charities. Perhaps with its investigation of the Red Cross's response to Hurricane Katrina, Congress will seriously question the structure of government-led disaster relief programs. (Previous efforts by Senator Charles E. Grassley, Republican of Iowa, to strengthen oversight of nonprofit groups have been stymied.)

With the incendiary combination of huge government contracts, Internet fund-raising and appeals based on mass disasters, the charity business has entered a new age. Americans should continue to help those in dire need, but they should also look around before sending a check or clicking the "donate" button.